In the past few years, we have all seen interest rates on the rise, at the same time as we have experienced a cost-of-living increase. This has meant that some of your clients will experience financial stress, even with necessities such as housing and food. Everything is more expensive than it once was.
Because of this new reality, acquiring property has also generally been harder, because budgets are stretched to the limit. This new reality has created stress and anxiety for many Australians, and probably some of your clients.
There are also many Australians who fixed their interest rates for a period when interest rates were lower. This strategy was a good one and allowed these Australians to enjoy lower interest rates for longer, while variable rates were rising.
Many other Australians decided to stick with a variable rate, either because they had no choice, or they may not have thought it was worth the risk of fixing their interest rate when it was uncertain whether interest rates would drop even lower.
If your client decided on a lower fixed interest rate a few years ago, that rate may be coming to the end of its fixed term. After the fixed term ends, interest rates will fluctuate again, and as they have been creeping higher it is likely that more than a few of your clients will be struggling to make their repayments on time.
Some people in this situation will know what to do. Others will deny themselves necessities to continue to pay “the bank” back and keep a roof over their heads. Others will bury their head in the sand and begin defaulting on payments, which can have longer term devastating effects.
What can you do to help?
If a client has reached out to you and expressed mortgage stress, or you know a fixed interest period is ending, you can make some suggestions to your client, to:
- Create a budget factoring in the current higher interest rate repayments.
- Pause charitable donations until they can afford them again
- Look for free entertainment whether it be a concert in a park, free entry into an art show, or activities provided by a church
- Use cheaper public transport when available, rather than using your own car
- Manage streaming subscriptions (only pay for what you use regularly)
- Refinance them into a better rate
- Suggest they contact their creditors and ask for a short-term payment holiday
All these suggestions may help.
If your client is still struggling with overwhelming debt, and their debts continue to escalate, we can help.
Our team of kind and non-judgmental specialists will step your client through some options to assist them to get their finances back on track. Or you could contact the National Debt helpline.
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